eBay Not Liable for Keywords Usage

The Advocate General of the European Court of Justice issued an interesting Opinion on the dispute L'Oréal vs. eBay relating to the purchase by eBay of keywords (e.g. AdWords keywords) identical to L'Oréal's registered trademarks linking to eBay listings offering for sale both infringing goods and non-infringing goods and whether eBay could be deemed liable for the trademark infringement performed through the goods traded on its platform.

The Advocate General held, among others, that:

"if the nature of an operator as a marketplace is sufficiently clearly communicated in the ad displayed with the search results of an internet search engine, the fact that some users of that marketplace may infringe a trade mark is as such not liable to have an adverse effect on the functions of quality, communication and investment of that trade mark".

Therefore, eBay's purchase of the keywords does not trigger per se a trademark infringement and therefore eBay would not be liable for the infringements performed by its users. Also, the Advocate General added:

"If the use complained of by the trade mark proprietor consists of the display of the sign on the website of the operator of the electronic marketplace itself rather than in a sponsored link on the website of a search engine operator, the sign is not used by the operator of the electronic marketplace ‘in relation to’ the infringing goods within the meaning of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94".

Indeed, with reference to the eBay's case, the "searches relate to listings stored by the users of the marketplace", while in the case of search engines, such search engines have stored the Internet pages.
It is also very interesting the opinion of the Advocate General for its view on the requirement of the "actual knowledge" of the unlawful activity that would oblige - according to the E-Commerce Directive 2000/31 - the hosting provider to "take down" (i.e. remove) the unlawful material from its website. The Advocate General held that 2 conditions need to be fulfilled to meet the "actual knowledge test":

1. the service provider must have actual knowledge of, and not a mere suspicion or assumption regarding, the illegal activity or information [and] legally ‘knowledge’ may refer only to past and/or present but not to the future; and
2. it is not enough that the service provider ought to have known or has good reasons to suspect illegal activity and this is also in line with Article 15(1) of Directive 2000/31 which forbids the Member States to impose on service providers general obligations to monitor the information they transmit or store or to actively seek facts or circumstances indicating illegal activity.

In the light of the above "actual knowledge means knowledge of past or present information, activity or facts that the service provider has on the basis of an external notification or its own voluntary research". Such conclusion is relevant also under an Italian law perspective as Italian E-Commerce prescribes that hosting providers are obliged to take down the unlawful material only after a court order, even though such provision has been frequently misinterpreted by courts that held hosting providers liable for non-taking down infringing material even in absence of any court order.
It is interesting the reference by the Adovocate General only to past and/or present infringements, even though he also states that if the same infringement is performed in the future by the user with reference to the same trade mark, an electronic marketplace is meant to have knowledge of such infringement. On the basis of the same interpretation the Advocate General held that rightsholders can require the issue of an injunction under Article 11 of the Enforcement of IPRs Directive 2004/48/EU obliging the hosting provider to prevent future infringements performed by the same user in relation to the same trademark.
This conclusion is arguable as it would oblige hosting providers to monitor the activity performed by the users of its platform which might be deemed in contrast with Article 15(1) of Directive 2000/31 which forbids to impose on service providers general monitoring obligations. Indeed, Italian law prescribes that the issue of the above mentioned injunction cannot be in contrast with the provisions of the E-Commerce Directive that will prevail (i.e. no monitoring obligation on the service providers can be triggered as a consequence of the issue of the injunction).

It is necessary to stress that the Opinions of the Advocate General are not binding on the European Court of Justice and it will be interesting to see the view of the court on the case in particular with reference to the possibility to issue injunctions relating to future breaches. Do you want to discuss about this opinion? Feel free to contact me, Giulio Coraggio.

Websites Obliged to Act before Consumers’ Courts?

The European Court of Justice has issued an interesting decision in relation to the rules of jurisdiction applicable to contractual relationships between consumers and websites based in other EU Member States. According to the EU Regulation 44/2001 on the jurisdiction and the enforcement of judgments in civil and commercial matters, the courts of the domicile of the consumer have jurisdiction in case of disputes between a trader and a consumer based in two different EU Member States when the former “directs such activity to that Member State”.

The ECJ clarified the scope of such provision in relation to websites stressing that the mere accessibility of a website on the Internet is not sufficient to meet such “targeting requirement” but:

“the trader [i.e. the website] must have manifested its intention to establish commercial relations with consumers from one or more other Member States, including that of the consumer’s domicile. [---] Such evidence does not include mention on a website of the trader’s email address or geographical address, or of its telephone number without an international code”.

In particular, the ECJ held that not all the “interactive” websites are meant to direct their activity to the country of their users because of the mere possibility for a consumer to conclude a contract with the trader.On the contrary, a higher level of evidence of the targeting requirement is necessary. Such evidence can be given, among others, through:

1. the mentioning by the trader that it is offering its services or its goods in one or more Member States designated by name;
2. the disbursement of expenditure on an internet referencing service to the operator of a search engine in order to facilitate access to the trader’s site by consumers domiciled in various Member States;
3. the international nature of the activity at issue, such as certain tourist activities;
4. the mentioning by the trader of telephone numbers with the international code;
5. the use of a top-level domain name other than that of the Member State in which the trader is established, for example ‘.it’, or use of neutral top-level domain names such as ‘.com’ or ‘.eu’;
6. the description of itineraries from one or more other EU Member States to the place where the service is provided; and 
7. the mentioning of an international clientele composed of customers domiciled in various Member States, in particular by presentation of accounts written by such customers.

This is relevant also because the same principle is set out in the EU Regulation 593/2008 on the law applicable to contractual obligations i.e. websites found to direct their activity to consumers of an EU Member State shall comply with the non-derogable laws of the country of domicile of the consumer despite of their place of establishment.

Furthermore this is even more relevant under an Italian law perspective as the abovementioned EU Regulations are applicable, according to Italian private international law, also to non-EU entities i.e. if an American website directs its business to Italian consumers (even if it does not have any infrastructure in the EU), Italian court will have jurisdiction on the potential disputes and the website shall comply with Italian non-derogable laws.

I understand that the above might have a considerable impact on online businesses. For this purpose, feel free to contact me, Giulio Coraggio, if you want to discuss the matter. 

Casino Games and Cash Games Saga Almost Over!

The never ending saga of the Italian decree regulating cash poker games and casino games seems to be almost over. The Administrative Court of Lazio Region rejected the claim brought by one of the major Italian gaming operators, Microgame, against the decree. Indeed, earlier this year, the Administrative Court of Lazio Region had ordered the temporary suspension of the efficacy of decree because of the alleged inconsistency between the decree notified to the European Commission and the one subsequently approved by the Italian Gaming Authority (AAMS).
Pending the temporary suspension of the decree, AAMS re-notified the decree together with all its technical specifications to the European Commission and the court now held that such second notification has actually "cured" the challenged defect. Therefore, unless Microgame decides to appeal against such decision, it will not be in the position to challenge the new version of the casino games and cash poker games decree under such grounds.
This is a very good news for the current operators that waited the launch of such new games for more than one year, but it represents a very good news also for the new entrants in the Italian market that will be able shortly to apply for an Italian remote gaming license.
However, despite the expected publication on the Italian Official Gazette of the new version of the decree in the next few days, it is likely that the launch of casino games and cash poker games will not occur before the end of first quarter of 2011. Indeed, also the current licensed operators shall first upgrade their license to the requirements prescribed by the new licensing regime and then go through a technical authorization process before being able to start offering such games to Italian players.
This means that new entrants in the market might have the time to obtain an Italian remote gaming license and launch these new games at the same time as the current operators without suffering a major competitive disadvantage. Therefore, the beginning of 2011 might represent a new stage for the Italian online gaming market with new games and new players. Such circumstance together with the consequential expected doubling of the turnover of the market are likely to attract the attention of the entire gaming world.

Do you want to know more on the above? Feel free to contact me, Giulio Coraggio.

Italian VLT Market: The first Data

After the launch of the videolotteries (VLT) in the Italian gaming market, now it is time to see what happened in the last months. Here is the first information available:

• around 4,500 VLTs have been installed so far out of almost 57,000 VLTs that operators are entitled to install and 253 VLT gaming halls have been opened (of which over 100 belong to Lottomatica);
• during the month of October 2010 the VLTs collected € 116 millions (i.e. more than € 3.5 millions per day) which makes the need to implement a proper system for the management of payments crucial;
• the current VLT manufacturers that have successfully completed the testing phase with SOGEI are Inspired, Novomatic, Spielo and Ace Interactive, while Bally Technologies, BetStone and some others are in the process of completing it;
• on the 30th of October 2010 the licensees had to pay the second (and final) instalment of € 7,500 per VLT that they have the right to install.

The data mentioned show that Italian players have welcomed the VLTs but the market is still in an early start-up phase. This scenario might be of interest for both providers of services to VLT gaming halls and for gaming operators that want to enter into the Italian market as new gaming licenses will be issued in 2011. Do you want to know more on the above? Feel free to contact me, Giulio Coraggio.